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  • 10-Q (Oct 30, 2015)
  • 10-Q (Jul 30, 2015)
  • 10-Q (May 1, 2015)
  • 10-Q (Nov 10, 2014)
  • 10-Q (Jul 31, 2014)
  • 10-Q (May 2, 2014)

 
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TeleCommunication Systems 10-Q 2015

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2015

OR

¨

TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 0-30821

 

TELECOMMUNICATION SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

 

 

MARYLAND

 

52-1526369

(State or Other Jurisdiction of
Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

 

 

 

275 West Street, Annapolis, MD

 

21401

(Address of principal executive offices)

 

(Zip Code)

(410) 263-7616

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ¨

 

Accelerated filer þ

 

Non-accelerated filer ¨

 

Smaller reporting company ¨

 

 

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨    No   þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

 

Shares outstanding

 

 

as of April 30,

 

Title of Each Class

2015

 

Class A Common Stock, par value $0.01 per share

 

55,988,720

 

Class B Common Stock, par value $0.01 per share

 

4,801,245

 

Total Common Stock Outstanding

 

60,789,965

 

 

 

 

 

 

 

 

 


INDEX

TELECOMMUNICATION SYSTEMS, INC.

 

 

 

 

Page

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

Item 1.

 

Financial Statements

 

 

 

Consolidated Balance Sheets as of March 31, 2015 (Unaudited) and December 31, 2014

3

 

 

Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014 (Unaudited)

4

 

 

Consolidated Statements Comprehensive Income (Loss) for the three months ended March 31, 2015 and 2014 (Unaudited)

5

 

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014 (Unaudited)

6

 

 

Notes to Consolidated Financial Statements (Unaudited)

7

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

25

 

 

 

Item 4.

 

Controls and Procedures

25

 

 

PART II. OTHER INFORMATION

 

 

 

 

Item 1.

 

Legal Proceedings

26

 

 

 

Item 1A.

 

Risk Factors

26

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

26

 

 

 

Item 3.

 

Defaults Upon Senior Securities

26

 

 

 

Item 4.

 

Mine and Safety Disclosures

26

 

 

 

Item 5.

 

Other Information

27

 

 

 

Item 6.

 

Exhibits

27

 

 

SIGNATURES

28

 

 

 

 

2


TeleCommunication Systems, Inc.

Consolidated Balance Sheets

(amounts in thousands, except share data)

 

 

March 31,

 

 

December 31,

 

 

2015

 

 

2014

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

27,759

 

 

$

26,922

 

Marketable securities

 

22,812

 

 

 

23,226

 

Accounts receivable, net of allowance of $500 in 2015 and $605 in 2014

 

51,170

 

 

 

74,051

 

Unbilled receivables

 

29,786

 

 

 

22,324

 

Inventory

 

8,774

 

 

 

6,253

 

Deferred project costs and other current assets

 

24,006

 

 

 

17,977

 

Total current assets

 

164,307

 

 

 

170,753

 

Property and equipment, net of accumulated depreciation and amortization of $86,167 in

     2015 and $83,645 in 2014

 

31,857

 

 

 

33,418

 

Software development costs, net of accumulated amortization of $3,459 in 2015 and

    $3,072 in 2014

 

4,627

 

 

 

4,608

 

Acquired intangible assets, net of accumulated amortization of $14,897 in 2015 and $13,970 in 2014

 

16,279

 

 

 

17,206

 

Goodwill

 

104,241

 

 

 

104,241

 

Other assets

 

3,612

 

 

 

3,855

 

Total assets

$

324,923

 

 

$

334,081

 

Liabilities and stockholders equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued expenses

$

40,931

 

 

$

41,599

 

Accrued payroll and related liabilities

 

9,683

 

 

 

13,599

 

Deferred revenue

 

21,571

 

 

 

22,000

 

Current portion of bank borrowings, notes payable, and capital lease obligations

 

13,723

 

 

 

19,291

 

Total current liabilities

 

85,908

 

 

 

96,489

 

Notes payable and capital lease obligations, less current portion

 

119,278

 

 

 

119,850

 

Deferred tax liabilities

 

3,688

 

 

 

3,556

 

Other liabilities

 

2,122

 

 

 

1,340

 

Stockholders equity:

 

 

 

 

 

 

 

Class A Common Stock; $0.01 par value:

 

 

 

 

 

 

 

Authorized shares - 225,000,000; issued and outstanding shares of 55,962,074  in

     2015 and 55,144,066  in  2014

 

560

 

 

 

552

 

Class B Common Stock; $0.01 par value:

 

 

 

 

 

 

 

Authorized shares - 75,000,000; issued and outstanding shares of 4,801,245 in

     2015 and 4,801,245 in 2014

 

48

 

 

 

48

 

Additional paid-in capital

 

347,157

 

 

 

346,277

 

Accumulated other comprehensive loss

 

(216

)

 

 

(114

)

Accumulated deficit

 

(233,622

)

 

 

(233,917

)

Total stockholders equity

 

113,927

 

 

 

112,846

 

Total liabilities and stockholders equity

$

324,923

 

 

$

334,081

 

 

 

See accompanying Notes to Consolidated Financial Statements.

 

3


TeleCommunication Systems, Inc.

Consolidated Statements of Operations

(amounts in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

March 31,

 

 

2015

 

 

2014

 

Revenue

 

 

 

 

 

 

 

Services

$

62,849

 

 

$

62,269

 

Systems

 

19,018

 

 

 

22,821

 

Total revenue

 

81,867

 

 

 

85,090

 

 

 

 

 

 

 

 

 

Direct costs of revenue

 

 

 

 

 

 

 

Direct cost of services revenue

 

34,722

 

 

 

33,415

 

Direct cost of systems revenue

 

13,380

 

 

 

16,876

 

Total direct cost of revenue

 

48,102

 

 

 

50,291

 

 

 

 

 

 

 

 

 

Services gross profit

 

28,127

 

 

 

28,854

 

Systems gross profit

 

5,638

 

 

 

5,945

 

Total gross profit

 

33,765

 

 

 

34,799

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

Research and development expense

 

8,447

 

 

 

10,363

 

Sales and marketing expense

 

6,384

 

 

 

6,931

 

General and administrative expense

 

12,619

 

 

 

11,647

 

Depreciation and amortization of property and equipment

 

3,037

 

 

 

3,403

 

Amortization of acquired intangible assets

 

927

 

 

 

949

 

Total operating expenses

 

31,414

 

 

 

33,293

 

 

 

 

 

 

 

 

 

Income from operations

 

2,351

 

 

 

1,506

 

 

 

 

 

 

 

 

 

Interest expense

 

(1,979

)

 

 

(2,204

)

Amortization of deferred financing fees

 

(163

)

 

 

(168

)

Other income, net

 

452

 

 

 

137

 

Net income (loss) before income taxes

 

661

 

 

 

(729

)

Income tax (provision) benefit

 

(366

)

 

 

252

 

Net income (loss)

$

295

 

 

$

(477

)

 

 

 

 

 

 

 

 

Net income (loss) per share-basic

$

0.00

 

 

$

(0.01

)

Net income (loss) per share-diluted

$

0.00

 

 

$

(0.01

)

 

 

 

 

 

 

 

 

Weighted average shares outstanding-basic

 

60,342

 

 

 

59,079

 

Weighted average shares outstanding-diluted

 

62,026

 

 

 

59,079

 

 

See accompanying Notes to Consolidated Financial Statements.

 

4


TeleCommunication Systems, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(amounts in thousands)

(unaudited)

 

 

Three Months Ended

 

 

March 31,

 

 

2015

 

 

2014

 

Net income (loss)

$

295

 

 

$

(477

)

Other comprehensive loss:

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

7

 

 

 

(4

)

Unrealized loss on interest rate hedge

 

(197

)

 

 

 

Unrealized gain (loss) on securities:

 

 

 

 

 

 

 

Arising during the period

 

92

 

 

 

(1

)

Reclassification to net income (loss)

 

(4

)

 

 

(2

)

Net unrealized gain (loss)

 

88

 

 

 

(3

)

Other comprehensive loss

 

(102

)

 

 

(7

)

Comprehensive income (loss)

$

193

 

 

$

(484

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying Notes to Consolidated Financial Statements.

 

5


TeleCommunication Systems, Inc.

Consolidated Statements of Cash Flows

(amounts in thousands)

(unaudited)

   

 

Three Months Ended

 

 

March 31,

 

 

2015

 

 

2014

 

Operating activities:

 

 

 

 

 

 

 

Net income (loss)

$

295

 

 

$

(477

)

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization of property and equipment

 

3,037

 

 

 

3,403

 

Stock-based compensation expense

 

1,318

 

 

 

1,821

 

Amortization of acquired intangible assets

 

927

 

 

 

949

 

Deferred tax expense

 

132

 

 

 

 

Amortization of capitalized software development costs

 

387

 

 

 

298

 

Amortization of deferred financing fees

 

163

 

 

 

168

 

Amortization of investment premiums and accretion of discounts, net

 

82

 

 

 

76

 

Other non-cash adjustments

 

141

 

 

 

1,079

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable, net

 

23,265

 

 

 

1,342

 

Unbilled receivables

 

(7,462

)

 

 

(1,063

)

Inventory

 

(2,521

)

 

 

705

 

Deferred project costs and other current assets

 

(6,029

)

 

 

223

 

Other assets

 

80

 

 

 

(193

)

Accounts payable and accrued expenses

 

(1,603

)

 

 

1,897

 

Accrued payroll and related liabilities

 

(3,916

)

 

 

(5,553

)

Deferred revenue

 

585

 

 

 

(107

)

Other liabilities

 

(429

)

 

 

3,161

 

Subtotal - Changes in operating assets and liabilities

 

1,970

 

 

 

412

 

Net cash provided by operating activities

 

8,452

 

 

 

7,729

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

Proceeds from sale of property and equipment

 

1,550

 

 

 

 

Purchases of property and equipment

 

(1,697

)

 

 

(1,038

)

Capitalized software development costs

 

(401

)

 

 

(504

)

Purchases of marketable securities

 

(1,623

)

 

 

(2,807

)

Proceeds from sale and maturity of marketable securities

 

2,043

 

 

 

2,525

 

Net cash used in investing activities

 

(128

)

 

 

(1,824

)

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

Payments on bank borrowings, notes payable, and capital lease obligations

 

(13,057

)

 

 

(1,926

)

Proceeds from bank and other borrowings

 

6,000

 

 

 

 

Payments of tax withholdings on restricted stock

 

(1,048

)

 

 

(602

)

Earn-out payment related to 2012 acquisition

 

 

 

 

(268

)

Proceeds from exercise of employee stock options and sale of stock

 

618

 

 

 

69

 

Net cash used in financing activities

 

(7,487

)

 

 

(2,727

)

 

 

 

 

 

 

 

 

Net increase in cash

 

837

 

 

 

3,178

 

Cash and cash equivalents at the beginning of the period

 

26,922

 

 

 

41,904

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at the end of the period

$

27,759

 

 

$

45,082

 

See accompanying Notes to Consolidated Financial Statements.

 

6


TeleCommunication Systems, Inc.

Notes to Consolidated Financial Statements

March 31, 2015

(amounts in thousands, except per share amounts)

(unaudited)

 

 

1. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. There were no significant changes to our accounting policies as described in Note 1 of our consolidated financial statements included in Item 15(a)(1) of our 2014 Annual Report on Form 10-K. These unaudited consolidated financial statements should be read in conjunction with our audited financial statements and related notes included in our 2014 Annual Report on Form 10-K. The terms “TCS,” “Company,” “we,” “us,” and “our” as used in this Form 10-Q refer to TeleCommunication Systems, Inc. and its subsidiaries as a combined entity, except where it is made clear that such terms mean only TeleCommunication Systems, Inc.

Use of Estimates. The preparation of these financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Significant estimates and assumptions in these consolidated financial statements include estimates used in revenue recognition, fair value of business combinations, fair value associated with goodwill, intangible assets and long-lived asset impairment tests, estimated values of software development costs, income taxes and deferred valuation allowances, the fair value of marketable securities and stock-based compensation, and legal and contingency fees. Actual results could differ from those estimates.

 

Recent Accounting Pronouncements. In April 2015, the Financial Accounting Standards Board ("FASB") issued new guidance to simplify the presentation of debt issuance costs by requiring debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying value of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the update. The guidance is effective for annual periods beginning after December 15, 2015, including interim periods within those periods. Early adoption is permitted. The amended guidance is not expected to have a material impact on our consolidated financial statements.

 

In August 2014, the FASB issued new guidance for presentation of financial statements for going-concern, which addresses when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year after the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The new guidance applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The amended guidance is not expected to have a material impact on our consolidated financial statements.

 

In May 2014, the FASB issued new guidance for revenue recognition. The new guidance provides a five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety. The core principle of the new standard is that an entity will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The standard also requires more detailed disclosures to enable users of the financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The guidance provides alternative methods of initial adoption; retrospectively applied to each prior reporting period or a modified retrospective approach, in which the cumulative effect of initially applying this new guidance is recognized at the date of initial application with additional disclosures. The guidance is effective for annual periods beginning after December 15, 2016 including interim periods within those annual periods. Early adoption is not permitted. We are currently evaluating the alternative transition methods and the impact that this standard will have on our consolidated financial statements.

 

 

 

 

7


2. Earnings per share

Basic net income (loss) per common share is based upon the average number of shares of common stock outstanding during the period. Stock options and restricted stock of 9,500 shares were excluded from the computation of diluted net income per share because their inclusion would have been anti-dilutive for the three months ended March 31, 2015.

For the three months ended March 31, 2015 and 2014, 4,832 shares issuable upon conversion of our 7.75% Convertible Notes were excluded from the computation of diluted net income (loss) per share because their inclusion would have been anti-dilutive.

For the three months ended March 31, 2014, shares issuable upon conversion of our 4.5% Convertible Senior Notes were excluded from the computation of diluted net loss per share because their inclusion would have been anti-dilutive.

Concurrent with the issuance of the 4.5% Convertible Notes, we entered into convertible note hedge and warrant transactions. Because the Company would have exercised a call option if the market price of our stock exceeded the warrant exercise price of $12.74 per share, the effect of the convertible note hedge, which expired pro rata as the 2014 Notes were repurchased, was excluded from the calculation of diluted earnings per share for the three months ended March 31, 2014, as the impact was always considered anti-dilutive. The warrants expire in 2015, are considered to have no value, and were excluded from the calculation of diluted earnings per share for the three months ended March 31, 2015 and 2014.  

The following table summarizes the computations of basic and diluted earnings per share:

 

Three Months Ended

 

 

March 31,

 

 

2015

 

 

2014

 

Numerator:

 

 

 

 

 

 

 

Net income (loss), basic and diluted

$

295

 

 

$

(477

)

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

Total basic weighted-average common shares outstanding

 

60,342

 

 

 

59,079

 

Effect of dilutive stock options and restricted stock based on treasury stock method

 

1,684

 

 

 

 

Weighted average diluted shares

 

62,026

 

 

 

59,079

 

 

 

 

 

 

 

 

 

Basic earnings per common share:

 

 

 

 

 

 

 

Net income (loss) per share-basic

$

0.00

 

 

$

(0.01

)

Diluted earnings per common share:

 

 

 

 

 

 

 

Net income (loss) per share-diluted

$

0.00

 

 

$

(0.01

)

Our two classes of common stock (Class A and B) share equally in dividends declared or accumulated and have equal participation rights in undistributed earnings. In addition, our unvested restricted stock does not contain non-forfeitable rights to dividends and dividend equivalents. As such, unvested shares of restricted stock are not participating securities and our basic and diluted earnings per share are not impacted by the two-class method of computing earnings per share.

 

 

 

3. Stock-Based Compensation

Restricted Stock

We had 1,613 and 2,180 restricted stock units outstanding at a weighted-average grant date fair value per share of $2.73 and $2.39 as of March 31, 2015 and 2014, respectively. Total unrecognized share-based compensation expense is approximately $3,800 and $4,000 as of March 31, 2015 and 2014, respectively, which is expected to be recognized over a weighted-average period of approximately two years.

Stock Options

We had 16,975 and 16,272 stock options outstanding as of March 31, 2015 and 2014, respectively, of which 11,853 were “in-the-money” at March 31 2015. During the first three months of 2015, we granted 2,071 options and 209 shares were exercised. Total unrecognized share-based compensation expense was approximately $5,700 and $5,000 as of March 31, 2015 and 2014, respectively, which is expected to be recognized over a weighted-average period of approximately four and three years, respectively.

 

8


Total Stock-Based Compensation

We recognized total share-based compensation expense of $1,318 and $1,821 in the first quarters of 2015 and 2014, respectively.

 

 

4. Supplemental Disclosure of Cash Flow Information

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

 

2015

 

 

2014

 

 

 

 

 

 

 

 

 

Property and equipment acquired under capital lease

$

917

 

 

$

344

 

 

 

 

 

 

 

 

 

Interest paid

$

1,015

 

 

$

868

 

 

 

 

 

 

 

 

 

Income taxes paid (refunded)

$

235

 

 

$

(32

)

 

 

5. Marketable Securities

Available-for-sale marketable securities at March 31, 2015:

 

 

Amortized

 

 

Gross

 

 

Gross

 

 

Estimated

 

 

Cost

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

Basis

 

 

Gains

 

 

Losses

 

 

Value

 

Corporate bonds

$

21,503

 

 

$

60

 

 

$

(17

)

 

$

21,546

 

Mortgage-backed and asset-backed securities

 

968

 

 

 

 

 

 

(2

)

 

 

966

 

Agency bonds

 

300

 

 

 

 

 

 

 

 

 

300

 

Total marketable securities

$

22,771

 

 

$

60

 

 

$

(19

)

 

$

22,812

 

The following table summarizes the estimated fair value of available-for-sale marketable securities by contractual maturity at March 31, 2015:

 

Fair

Value

 

Due within 1 year or less

$

10,331

 

Due after 1 through 5 years

 

11,515

 

Mortgage-backed securities not due in a single maturity date

 

966

 

 

$

22,812

 

 

Available-for-sale marketable securities at December 31, 2014:

 

 

Amortized

 

 

Gross

 

 

Gross

 

 

Estimated

 

 

Cost

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

Basis

 

 

Gains

 

 

Losses

 

 

Value

 

Corporate bonds

$

21,748

 

 

$

6

 

 

$

(50

)

 

$

21,704

 

Mortgage-backed and asset-backed securities

 

1,226

 

 

 

 

 

 

(3

)

 

 

1,223

 

Agency bonds

 

300

 

 

 

 

 

 

(1

)

 

 

299

 

Total marketable securities

$

23,274

 

 

$

6

 

 

$

(54

)

 

$

23,226

 

The following table summarizes the estimated fair value of available-for-sale marketable securities by contractual maturity at December 31, 2014:

 

Fair

Value

 

Due within 1 year or less

$

7,483

 

Due after 1 through 5 years

 

14,520

 

Mortgage-backed securities not due in a single maturity date

 

1,223

 

 

$

23,226

 

 

9


 

6. Fair Value Measurements

Our assets and liabilities subject to fair value measurements on a recurring basis and the required disclosures:

 

 

Fair

 

 

Fair Value Measurements

 

 

Value

 

 

Using Fair Value Hierarchy

 

As of March 31, 2015

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

27,759

 

 

$

27,759

 

 

$

 

 

$

 

Corporate bonds

 

21,546

 

 

 

21,546

 

 

 

 

 

 

 

Mortgage-backed and asset-backed securities

 

966

 

 

 

966

 

 

 

 

 

 

 

Agency bonds

 

300

 

 

 

300

 

 

 

 

 

 

 

Marketable securities

 

22,812

 

 

 

22,812

 

 

 

 

 

 

 

Deferred compensation plan investments

 

973

 

 

 

973

 

 

 

 

 

 

 

Assets at fair value

$

51,544

 

 

$

51,544

 

 

$

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap

$

437

 

 

$

 

 

$

437

 

 

$

 

Deferred compensation

 

913

 

 

 

913

 

 

 

 

 

 

 

Liabilities at fair value

$

1,350

 

 

$

913

 

 

$

437

 

 

$

 

 

 

 

Fair

 

 

Fair Value Measurements

 

 

Value

 

 

Using Fair Value Hierarchy

 

As of December 31, 2014

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

26,922

 

 

$

26,922

 

 

$

 

 

$

 

Corporate bonds

 

21,704

 

 

 

21,704

 

 

 

 

 

 

 

Mortgage-backed and asset-backed securities

 

1,223

 

 

 

1,223

 

 

 

 

 

 

 

Agency bonds

 

299

 

 

 

299

 

 

 

 

 

 

 

Marketable securities

 

23,226

 

 

 

23,226

 

 

 

 

 

 

 

Deferred compensation plan investments

 

1,282

 

 

 

1,282

 

 

 

 

 

 

 

Assets at fair value

$

51,430

 

 

$

51,430

 

 

$

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap

$

240

 

 

$

 

 

$

240

 

 

$

 

Deferred compensation

 

873

 

 

 

873

 

 

 

 

 

 

 

Liabilities at fair value

$

1,113

 

 

$

873

 

 

$

240

 

 

$

 

 

The carrying values of financial instruments, including accounts receivable, unbilled receivables, and accounts payable approximate their fair values due to their short-term maturities.

We hold marketable securities that are investment grade and are classified as available-for-sale. The securities include corporate bonds, agency bonds, and mortgage and asset-backed securities that are carried at fair market value based on quoted market prices.

We hold trading securities as part of a rabbi trust to fund supplemental executive retirement